Don't ignore the FTT- you could end up behind bars.

Don’t ignore the FTT – you could end up behind bars. As Shmuli Simon reports, a recent case has resulted in a prison sentence

In October last year, Soraya Demeshghi was committed to prison for contempt of court. Ms Demesghi was sentenced to 12 months but the Judge told the 65-year-old landlord of a block of flats in Maida Vale that if she purged her contempt, she could be brought before the Court at any time and he was confident she would be released . . . three months later, she is still there.

Ms Demeshghi was held in contempt of court for repeatedly breaching the terms of a Management Order made by the First-tier Tribunal of the Property Chamber or FTT. For parties involved in cases brought before the FTT the message is clear - comply or else!

In February 2013, a number of leaseholders at Welford House had made an application for the FTT to strip Ms Demeshghi of her right to manage the property and appoint Matthew Young, managing director of Integrity Property Management Limited, to manage the property on the FTT’s behalf. On 6 May 2014, the FTT made the Order appointing Mr Young, in accordance with section 24 of the Landlord and Tenant Act 1987. When the Order was made, Mr Young was already the FTT-appointed manager of a block of flats in Hertfordshire.

The appointment of a manager under Section 24 of the Act is similar to the appointment of an administrator over a company, as is the requirement to cooperate and deliver up documents. Therefore, the Order provided for Ms Demeshghi among other things:

  • to assist and cooperate with Mr Young in going about his duties;
  • not to interfere with or attempt to interfere with his exercise of any duties or powers conferred on him by the Order; and
  • to deliver up to Mr Young, within 14 days, all hard and soft copies of any documents and records in her control and / or procure her employees and agents to do the same.

In August 2014, Mr Young instructed Integrity to issue proceedings in the County Court to enforce the Order but right up to the day of her final committal hearing, Ms Demeshghi continued to argue the Order was invalid due to defective service of the Section 22 Notice. Under the 1987 Act this Notice must be served on the landlord before an application can be made to the FTT to appoint a new manager.

The leaseholders’ application for the appointment of a manager by the FTT had been coupled with an application under Section 27A of the Landlord and Tenant Act 1985 for a determination of the reasonableness and payability of service charges (the Service Charges Application) in connection with a scheme of major works required at the property. In September 2014, a case management conference re the Service Charges Application gave Ms Demeshghi a second chance to comply with the terms of the Order but she continued to defy the FTT.

In November 2014, Mr Young applied for Judgment in Default against Ms Demeshghi on the grounds she did not serve a Defence in the enforcement proceedings and the matter was listed for a hearing on 21 April 2015. In front of District Judge Lightman, Ms Demeshghi declared she did not mind going to prison but no one expected that she would breach the subsequent enforcement order that included a penal notice. The committal application was lodged at the end of April 2015 and the matter came before His Honour Judge DC Mitchell. At a hearing on 11 September 2015, the Judge gave Ms Demeshghi a final chance to comply with the Order, warning her that otherwise he would commit her to prison.

At the committal hearing on 16 October, HHJ Mitchell was persuaded that Ms Demeshghi was still in breach of the Order; in particular, she had failed to deliver up documents and serve an affidavit but her breaches also included failing to pay service charges on flats she owns at the property and denying Mr Young access to inspect her flats. In addition to a custodial sentence, Ms Demeshghi was ordered to pay costs of almost £29,000.

Ironically, if Ms Demeshghi had complied with the Order, Mr Young would have become aware of various legal proceedings to which the landlord was party. According to Integrity, Mr Young could have then taken steps to settle these issues on Ms Demeshghi’s behalf and even may have been able prevent her bankruptcy earlier last year.

For more information, contact:

Shmuli Simon LLB (Hons), MIRPM, AssocRICS

DD: 0161 235 6499 M: 0797 314 5955

shmuli.simon@integritypm.co.uk

@rpmlawyer